Data driven member engagement, member profiling and the power of persuasive nudging

I really enjoyed the opportunity to speak at ASFA’s Spotlight on Member Engagement Forum held this week in Sydney. My task was to discuss how trustee approaches to member engagement would be influenced by the rise of the capture and use of data to inform better decision making and promote member behaviour.

We (QMV) increasingly see that funds are choosing to invest in the capture, analysis and utilisation of member data. We work very closely with clients to improve how member data is managed and most importantly to ensure that this investment results in valuable outcomes for members.

The volume of useful member data available to funds has risen exponentially in the last decade and is set to accelerate with reforms planned to promote competition in the information economy. As a result, we see a clear trend in favour of data governance, assurance and quality.

Below are a few slides and a summary of the information I presented at ASFA’s Member Engagement Forum earlier this week.

What do we mean by member engagement?

Member engagement means different things to different people. On one hand, it can be a useful means of segmenting the market for product design for example as we did with MySuper and ATO management of lost and inactive members for members with relatively low engagement. It can also be understood as a driver of member retirement outcomes and member retention and that higher levels of member engagement should be promoted by funds.

I suggest these are not mutually exclusive and challenge you to consider that:

- the increasing availability and usability of data can enable trustees to analyse engagement at an individual member level; and that

- this can enable the trustees to ‘nudge’ members towards target behaviours appropriate for their engagement profile.

Data and the New Information Economy

Earlier this year, the front cover of The Economist proclaimed that the world’s most valuable resource was no longer oil, but data. However, accumulating data and using it in sensible ways are two very different propositions.

The risks presented by poor data quality and accuracy are increasing in severity. What is assumed to be reliable data is all too often found to be inaccurate or incomplete. Having robust controls in place is increasingly important.

The proliferation in data production and capture is real … in zetabyte quantities. Yet much like crude oil, the value of data lies in its utility. The refinement of meaningful outcomes from all of these zetabytes isn’t easy.

Data driven technologies can effectively influence human behaviour. We are seeing a major shift towards a world in which human behaviour is influenced by data driven technologies.

There is a growing concentration of power in those who control data. Therefore, it should be equally unsurprising that there is a need to regulate the controllers of data to protect consumers, and ensure adequate competition exists.

The New Information Economy is the environment around which we need to consider member engagement.

Member Data Profile

The beautiful thing about the trust structure is that it is designed to accommodate the lack of time, information or ability in an individual which may place them in a position of dependence – or low engagement.

Using data to understand member and trustee decisions about member engagement isn’t new. There is a well-established suite of applications which contain a profile of members.

Rather than making generalisations about member engagement, we are now moving towards an environment where the profile of each individual member can be constructed to consider more detail about the member.

A few simple profile indexes which can be created for a superannuation fund member:

- Ethical Profile (social media can be great as an indicator or any non-financial investment objectives)

- Fraud Risk Profile (to assess the likelihood and impact of fraud against a member)

The more relevant data which is available as a reference in informing these indexes, the more valuable they can be in identifying target behaviours which are consistent with the member’s individual profile.

Rather than focus on increasing the number of interactions between a member and trustee, member engagement can be most effective when specific behaviours are identified as being appropriate based on the member individual engagement profile. Then the trustee can nudge the member towards the behaviour, of act on behalf of the member if the nudge isn’t successful.

Persuasive Nudging

There is a proven science dedicated to the design of technology with the intention of influencing human behaviour. It is very effective, sometimes dangerously so.

Persuasive nudging can be applied to promote member engagement through targeting specific member behaviours.

The prospect of nudging (or even mandating) individuals towards better outcomes has gained traction over the past decade, driven by developments in behavioural economics and finance.

While there is an important role to be played by Defaults and the Trust relationship, the increasing ability to individualise analysis can enable a more nuanced approach in using persuasive technology to target specific behaviours.

This raises the bar of what is expected of us.

Ensuring that our efforts to accommodate varying levels of member engagement add value to the retirement outcomes of members needs to be at the forefront of our thinking.

QMV has both the smarts and the tools to help superannuation trustees to get started in building better ways to engaging with members.

Many thanks to the team at ASFA for another highly valuable event and thanks to my co-presenters and panellists for sharing your ideas and knowledge. If you would like to view my full presentation and the presentations of other guest speakers Antony Jones, Lara Bourguignon, Terri Hamilton, Christine Artin, Danielle Mair, Hugh Morrow, Jessica Beresford, Vicki Doyle and Allyson Lowbridge please find them on ASFA’s website at this link.

Jonathan

Jonathan Steffanoni – Principal Consultant, Legal and Risk

If your fund is investing in the capture, analysis and utilisation of member data and would like to get more from data, then please contact QMV for a preliminary discussion. You might also be interested in checking out Investigate. Investigate is an automated data quality management solution, which now manages data for over 10% (and growing) of Australia’s total superannuation funds.